Correlation Between California Bond and Ab Government

Can any of the company-specific risk be diversified away by investing in both California Bond and Ab Government at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining California Bond and Ab Government into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between California Bond Fund and Ab Government Exchange, you can compare the effects of market volatilities on California Bond and Ab Government and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in California Bond with a short position of Ab Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Ab Government.

Diversification Opportunities for California Bond and Ab Government

0.0

Correlation Coefficient

California Bond  Ab Government

Pay attention - limited upside

The 3 months correlation between California and AEAXX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Ab Government Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Government Exchange and California Bond is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on California Bond Fund are associated (or correlated) with Ab Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Government Exchange has no effect on the direction of California Bond i.e., California Bond and Ab Government go up and down completely randomly.

Pair Corralation between California Bond and Ab Government

If you would invest  100.00  in Ab Government Exchange on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Ab Government Exchange or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

California Bond Fund  vs.  Ab Government Exchange

California Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, California Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Government Exchange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Government Exchange has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with California Bond and Ab Government

The main advantage of trading using opposite California Bond and Ab Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Ab Government can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ab Government will offset losses from the drop in Ab Government's long position.

The idea behind California Bond Fund and Ab Government Exchange pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.